91-0073

Illegal Drug Stamp

Signed 3/17/92

BEFORE THE UTAH STATE TAX COMMISSION

____________________________

XXXXX )

Petitioner ) FINDINGS OF FACT,

) CONCLUSIONS OF LAW,

v. ) AND FINAL DECISION

)

COLLECTION DIVISION OF THE ) Appeal No. 91‑0073

UTAH STATE TAX COMMISSION )

) Account No. XXXXX

Respondent )

_____________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission for a formal hearing on XXXXX. Alan Hennebold, Presiding Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner was XXXXX, attorney at law. Present and representing the Respondent was XXXXX, Assistant Utah Attorney General.

Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:

FINDINGS OF FACT

1. The tax in question is illegal drug stamp tax.

2. The period in question is XXXXX.

3. At the time in question, Petitioner owned and operated XXXXX in Salt Lake City, Utah. The business consisted of a shop area, where diesel repair work was performed, and an office. The door between the office and shop was rarely locked. The office contained a desk with several drawers that were usually open during the day, but locked at night. Petitioner, his wife and his two employees had access to the desk during the day.

4. One of Petitioner's employees, XXXXX, lived at the business premises in Petitioner's camper. On occasion, Petitioner used illegal drugs with XXXXX.

5. On XXXXX, police officers executed a warrant to search Petitioner's business for illegal drugs. During the course of that search, illegal drugs were found on XXXXX. No such drugs were found on Petitioner. However, in one of the desk drawers, officers discovered approximately XXXXX grams of amphetamine in a plastic bag inside a bank deposit bag. The officers also found seven other plastic bags, each containing approximately XXXXX grams of amphetamine, inside a small box in another desk drawer. Also in the desk were various personal effects and business papers belonging to Petitioner.

6. The tax stamps required by Utah's Illegal Drug stamp Tax Act were not affixed to the amphetamines, nor had any tax stamps been purchased with respect to such amphetamines.

7. Following the officers' search of his business premises, Petitioner was arrested and charged with possession of a controlled substance. Petitioner subsequently entered a guilty plea to the charge.

8. Based on the foregoing, Respondent assessed Petitioner with drug stamp tax in the sum of XXXXX plus penalty in an equal amount, for a total assessment of XXXXX. The assessment was later reduced by amendment to a tax and penalty totalling XXXXX.

9. Petitioner used amphetamines on a regular basis. He has admitted that the amphetamines found in the bank deposit bag were his. He denies any knowledge of the additional amphetamines found inside the other desk drawer.

CONCLUSIONS OF LAW

A tax of $$$$$ per gram of amphetamine is imposed pursuant to the Illegal Drug Stamp Tax Act. (Utah Code Ann. '59‑19‑103.)

A dealer may not possess any controlled substance upon which a tax is imposed by the Illegal Drug Stamp Act unless the applicable tax has been paid, as evidenced by a stamp or other official indicia. (Utah Code Ann. '59‑19‑1004(2).) "Dealer" includes a person who, in violation of Utah law, manufactures, produces, ships, transports, or imports into Utah or in any manner acquires or possesses seven or more grams of amphetamines. (Utah Code Ann. '59‑19‑102(2).)

Failure to affix the stamp required by the Illegal Drug Stamp Act results in the assessment of the tax due plus a 100% civil penalty. (Utah Code Ann. '59‑19‑106.)

Any tax and penalties assessed by the Commission are presumed to be valid and correct The burden is on the taxpayer to show their incorrectness or invalidity. (Utah Code Ann. '59‑19106(4).

DECISION AND ORDER

As noted above, Utah's Illegal Drug Stamp Tax Act imposes a tax on amphetamines and other illegal substances. Dealers in possession of such substances must pay the tax by purchasing and affixing drug stamps to the substances. Failure to do so renders the dealer liable for the amount of the tax plus a 100% penalty.

Petitioner concedes that the substance found at his place of business, in an office desk, consisted of XXXXX grams of amphetamines. He concedes that no drug stamps had been purchased or affixed to the amphetamines. He also admits ownership of one of the packets of amphetamines containing XXXXX grams. His only defense in this matter is that he did not possess the remaining XXXXX grams of amphetamines found in the second desk drawer. Petitioner implies that the drugs may have belonged to one of his employees, XXXXX.

Because criminal statutes prohibit possession of illegal drugs, Utah's appellate courts have established standards by which possession may be determined. Such possession may be either actual or constructive. State v. Carlson, 635 P.2d 72, 74 (1981). Since Petitioner was not in actual possession of the amphetamines in question, the assessment of tax and penalty can only be supported by a finding that Petitioner constructively possessed the amphetamines. In State v. Fox, 709 P.2d 316, 319 (1985), the Utah Court of Appeals discussed constructive possession as follows:

To find that a defendant had constructive possession of a drug or other contraband, it is necessary to prove that there was a sufficient nexus between the accused and the drug to permit an inference that the accused had both the power and the intent to exercise dominion and control over the drug. (citations omitted) Whether a sufficient nexus between the accused and the drug exists depends upon the facts and circumstances of each case. (citations omitted) Ownership and/or occupancy of the premises upon which the drugs are found, although important factors, are not alone sufficient to establish constructive possession, especially when occupancy is not exclusive. Some other factors which might combine to show a sufficient nexus between the accused and the drug are: incriminating statements made by the accused..., presence of drugs in a specific area over which the accused had control, such as a closet or drawer containing the accused's personal effects..., presence of drug paraphernalia among the accused's personal effects or in a place over which the accused has special control....

In the present case, the undisputed evidence establishes that Petitioner owned the premises in which the amphetamines were found; that he used amphetamines regularly; and that some of the amphetamines were admittedly his. The desk in which the amphetamines were found also contained papers and effects belonging to the Petitioner and pertaining to his business. The Petitioner has also pled guilty to the crime of possession of amphetamines. This combination of factors is sufficient to establish both his power and his intent to possess the amphetamines on which the assessment is based.

Based on the foregoing, the Commission finds that Petitioner was in constructive possession of the amphetamines upon which Respondent based its amended assessment of tax and penalty. The Commission therefore affirms Respondent's assessment of tax and penalty against Petitioner which was made pursuant to Utah's Illegal Drug Stamp Act. It is so ordered.

DATED this 17th day of March, 1992.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco S. Blaine Willes

Commissioner Commissioner

NOTICE: You have twenty (20) days after the date of the final order to file a request for reconsideration or thirty (30) days after the date of final order to file in Supreme Court a petition for judicial review. Utah Code Ann.''63‑46b‑13(1), 63‑46b‑14(2)(a).

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